What is the Value of Your Condo Unit After 50 Years?
Owning a house has been the dream of many for a long time, more so in the prevailing economic times that are tougher and largely unpredictable. In the recent past, owning a house has become a tricky undertaking, with costs hitting the roof and making such a venture prohibitive. To this end, cheaper and seemingly more convenient means of owning a place to call home have ‘cropped up’, and one of the most common modern day options is a condominium – short form ‘condo’.
A critical fact that is coming to light is that, the value of a condo unit is subject to change due to a lot of factors. In comparison with the value of a house which seems to appreciate over time, as well as that of the land, a condo’s rate of appreciation is not at par. This is especially due to the fact that owning a condo unit only translates to owning the space that is around your enclosure, nothing more. In this regard, one is in no way own the land, which happens to accrue the greatest value over time.
To effectively determine the value of a condo, it is fitting to keep in mind the costs that accompany it during the ownership period. The accruing costs largely bring down the ultimate resale value of the unit. A notable factor that drags its value is the physical depreciation of the units themselves. Five decades is by any standard a long time for a property, and it is prone to tear and wear– an occurrence that bears the effect of lowering the condos value. By and large, there are monthly memberships as well as maintenance fees that one has to pay, and which cumulatively turn out to be a substantial amount.
The law on its part is barely vague regarding the lifespan of a condo, although it seems to imply that the ownership of the same is void after a period of five decades. However, in the instance that one is interested in reselling the condo, there some mandatory costs that one has to incur before closing the deal. Capital gains tax is a cost that one cannot evade, and any VAT that is subsequently accrued with regard to the sale. These taxes have to be paid before transferring the ownership of the property, lest one has a case to answer with the state.
In the instance, one is lucky enough to get a buyer after this time – 50 years, deducting the accrued costs, together with the taxes payable at the time, the returns may prove to be extremely minimal. This is due to the fact that, contrary to popular belief, the cost of acquiring a condo is not the only cost that one incurs. Moreover, the price of the condo after this time period may be largely affected by its location. Time plays a very key role in the value of a property, and a location that may be in high demand at the present time, may be worn out by urban decay.
To this end, the value of a condominium may over 50 years differ largely, and be affected by many factors including its location. It is thereby essential to be ready for the eventuality that the value of a condo depreciates when such a period expires.